RIYADH: Saudi Basic Industries Corp (Sabic), the world’s fourth-biggest petrochemicals company, said on Sunday it expects positive growth in the second half of this year, backed by an increase in production and enhanced global economic outlook.
The comments came after Sabic reported an 81 per cent leap in second-quarter net profit, citing higher selling prices and a jump in sales volumes.
The first half of 2018 was “very positive” and Sabic expects the second half of the year to be “equally positive,” CEO Yousuf Al Benyan told a news conference.
Sabic has been a focus of investor attention after Reuters reported earlier this month that Saudi national oil giant Aramco aimed to buy a stake in Sabic, possibly taking the entire 70 per cent holding owned by Saudi Arabia’s sovereign wealth fund, Public Investment Fund (PIF). Aramco subsequently confirmed the report.
Al Benyan said on Sunday that talks on the potential acquisition of a stake in his company are taking place solely between Aramco and PIF.
“Hard to expect anything in this regard — Aramco-PIF talks are between an owner and a future investor,” Al Benyan said. “I can assure you we have trust in our regulators.” Sabic posted a net profit of 6.70 billion riyals ($1.79 billion, Dh6.56 billion) in the three months to June 30, up from 3.71 billion riyals in the year-earlier period, beating average analyst forecasts of a 5.8 billion riyals net profit.
Al Benyan said the company’s production rose about 1.5 million tonnes in the first half of the year and is expected to rise to three million tonnes by year-end.
Quarterly sales climbed 26 per cent from a year earlier to 43.28 billion riyals, and were up three per cent from the previous quarter.
Sabic shares edged down 0.6 per cent by 0905 GMT, dragging the Saudi index 0.9 per cent down, but the stock is richly valued at over 20 times trailing earnings.
Sabic’s results are closely tied to oil prices and global economic growth because its products — plastics, fertilisers and metals — are used extensively in construction, agriculture, industry and the manufacturing of consumer goods.
The petrochemical giant has plans to expand its presence in global markets; specifically in North America, China and North Africa, Al Benyan said, adding that the company is looking at various options, without giving further details.
In Europe, the company is still committed to its investment in Clariant, and is awaiting antitrust approvals for acquiring a 25 per cent stake in the Swiss speciality chemical maker which was announced in January, Al Benyan said.
Earlier this month, Clariant CEO said his company’s update on its ties with Sabic is likely to be delayed as antitrust approvals take longer than expected.